[Edaily Reporter Lee Jeong Hun ] Jeonbuk Bank, a subsidiary of JB Financial Group Co., Ltd.(175330), has become the first bank in South Korea to introduce won-denominated loans linked to digital assets. Initially, the service will be offered on a limited basis exclusively to corporate customers for the purpose of raising working capital using Bitcoin; however, the bank plans to review whether to expand the service in the future, taking into account regulatory changes and market demand.

According to financial industry sources on the 12th, Jeonbuk Bank has begun offering won-denominated loans backed by digital assets. The Bitcoin used as collateral is held within the management system of a specialized custodian and management provider; Jeonbuk Bank does not hold ownership of the virtual assets themselves or have direct control over them. For now, the eligible collateral is limited to Bitcoin, and the use of the loan proceeds is restricted to funds necessary for corporate business operations.

The decision to limit eligible collateral to Bitcoin was based on the fact that Bitcoin has the largest market capitalization and trading volume among virtual assets, resulting in strong price discovery functions and benchmark reliability. In fact, Jeonbuk Bank conducted its own stress tests and verified that Bitcoin maintains stability as collateral even during sharp price declines; it also confirmed that, thanks to its high liquidity, it can be easily liquidated at the time of repayment.

Loans backed by virtual assets are not an unfamiliar product to overseas financial institutions. JPMorgan Chase, the largest bank in the U.S., already launched Bitcoin-backed loans for institutional clients last March, and Switzerland’s Signum Bank is also offering similar credit facilities.

The product is designed so that the bank does not directly acquire the virtual assets during the enforcement of security interests. The amended Civil Enforcement Rules, which took effect on the 1st of this month, establish procedures for the seizure, liquidation, and enforcement of security interests regarding the right to claim the transfer of virtual assets, and allow for the liquidation of virtual assets through sale orders and other means. Jeonbuk Bank has adopted a structure whereby, even if grounds for enforcing a security interest—such as default—arise, the bank does not directly receive the virtual assets but instead liquidates them through enforcement procedures, such as a court-ordered sale, and then recovers the loan receivables using the proceeds from the sale.

To ensure stability, the bank has limited the entities authorized to custody virtual assets to virtual asset service providers whose registrations have been approved under the Act on the Reporting of Specific Financial Information. Registered service providers must obtain Information Security Management System (ISMS) certification and comply with the Travel Rule, as well as meet obligations under the Virtual Asset User Protection Act, including △segregated custody, △maintaining a specified cold wallet storage ratio, and △obtaining insurance or setting aside reserves. This effectively guarantees the security of custody through legislation, and since the bank does not directly manage the wallets, related risks are eliminated at the source.

The bank has also established its own valuation system. Jeonbuk Bank became the first in the banking sector to establish dedicated valuation criteria for digital assets. To prevent market price distortions caused by a single digital asset exchange, it adopted an index—calculated as a weighted average of prices from multiple global exchanges—and the median of market volatility indicators as the benchmark price. By adopting criteria with publicly disclosed calculation formulas and composition details, the bank has also enhanced external credibility.

Currently, institutional reforms regarding virtual assets are underway, including discussions on follow-up legislation related to digital assets. This loan is significant in that it establishes a model for utilizing virtual assets in bank lending within the scope of existing laws and regulations. Based on its operational experience, Jeonbuk Bank plans to accumulate expertise in related lending and risk management, and to continuously enhance its digital asset financial infrastructure—including collateral value monitoring and recovery systems—in line with future regulatory changes.

In particular, this Bitcoin-linked loan is noteworthy as the first tangible result of the “Crypto Bank” vision proposed by President Park Chun-won. President Park views digital assets as core assets of next-generation financial infrastructure and has proactively built up capabilities in line with the global financial sector’s trend toward mainstream integration.

Jeonbuk Bank has accumulated experience in financial infrastructure for the digital asset sector, including being the only regional bank to issue real-name verified deposit and withdrawal accounts to virtual asset exchanges. The bank has operated a dedicated team centered on experts in blockchain and digital assets, conducting business reviews and proof-of-concept (PoC) tests for payment and settlement systems, remittances, and stablecoins. Additionally, through collaboration with external specialized firms, the bank is preparing to launch an “all-in-one wallet” that integrates fiat currency accounts and digital asset wallets within a single UI/UX.

Jeong Sang-hoon, Executive Vice President of the Digital Division at Jeonbuk Bank, explained, “This loan is an example of designing a risk management and recovery structure that allows us to utilize existing bank lending and collateral management systems without directly holding virtual assets, all within the framework of current laws and regulations.” He added, “Going forward, we will continue to enhance our digital asset financial capabilities in line with changes in relevant laws and regulations.”